During his 23-year career in the multifamily industry, the Southern California native served as partner for some of the nation’s largest multifamily developers, including the Hanover Company, Trammell Crow Residential, Western National Group and JPI, and purchased and/or developed more than 15,000 multifamily units totaling almost $1 billion. Except for a five-and-a-half-year stint heading up Zaremba Group’s nationwide development activities, Davis’ focus has been on the Arizona and Southern California markets, where he has an established broker network. As president of Vision Residential Group LLC, which he founded in late 2005, Davis assembled a $300 million pipeline of projects in those two markets that he took to Lane Company this summer when he signed on as development partner for the Atlanta-based firm’s new Arizona and Southern California division.
“It’s an honor to join a great company and extend Lane’s development activity into the West. They do quality projects and understand the business,” said Davis, who made the decision to roll Vision’s pipeline into Lane in June, after receiving similar offers from several other national multifamily developers. Those offers began to pour in this year when Davis let it be known he was interested in working with a national company again, but with a Southwestern focus.
Davis had grown tried of traveling for Zaremba. “I went to Atlanta for a few months, but missed California. So I decided to finish up some projects in Phoenix for Zaremba before heading back to my old Newport Beach neighborhood,” said Davis. But he was hit with sticker shock when he saw how home prices there had skyrocketed. Instead, he opted to stay on in the Valley of the Sun and launch Vision Residential, using his own money to tie up and rezone sites. “There are a lot of development opportunities here and the area is growing by around 100,000 people a year,” said Davis, who now lives and has an office in Scottsdale.
With Vision, he planned to do only a couple of deals a year. “But when I left Zaremba I had a pipeline of about $250 million and the investors in those deals came knocking on my door offering to back me on future deals with their equity. And I thought, ‘I don’t want to be that big and have to hire that many people,’ so I began looking for the right opportunity to re-enter the national player arena,” Davis said.
When he learned that Lane Company was looking for a presence in Arizona, Davis wasn’t sure the company would be a good match with his development plans, which included California. “But when Mark McHenry, Lane Southwest president, and Lane CEO Bill Donges saw what I was doing with Vision, they agreed to take me on as their partner in both states. I started talking with Lane back in March and the more I was around them the more impressed I was with the whole organization. Bill Donges is a great leader and what Founder and Chairman George Lane is doing, creating an evergreen company, is very attractive because there’s obviously a succession plan and all of us partners will be able to continue on as long as we choose,” said Davis, referring to initiatives that were set into motion in 2002 when Donges joined Lane Company as chief operating officer. Donges took over George Lane’s position as CEO in 2005. Today, the company’s previously independent subsidiaries are unified under the Lane Company banner and a whole new management structure has been put in place.
“What attracted Lane to my philosophy is that I don’t buy land without entitlements. With Vision, I was using my own money to tie up sites and get very favorable terms. I was a year into that process when Lane came along and it accelerated their entrance into Arizona and gave me the established financial support system and infrastructure I need to do more and larger projects than I had planned to do at Vision,” said Davis, who intends to start about $100 million in projects with Lane by Q4 2007 or the first quarter of 2008 and another $100 million in the following 12 months, all in Phoenix. He is also in negotiations for two sites valued at $100 million in Southern California–one in the Long Beach area and another in Los Angeles County.
His Phoenix plans include delivery of an innovative product perfectly suited to the Valley of the Sun. Working with Architects Orange of Orange, Calif., Davis is introducing a 311-unit three-story wrap at Pasadera, a 40-acre mixed-use development in Avondale, southwest of Phoenix, that also will include 206,000 sq. ft. of retail and office space, 68 for-sale townhouse units in a gate-guarded community and 38 for-sale lofts above ground-floor retail. Lane will be responsible for the project’s residential component.
Pasadera, which is Spanish for stepping stone, is planned as a walkable village (and the northern gateway to Avondale) by the project’s master-plan developer, Rose Properties Southwest LLC, which purchased the land from Tempe-based SunCor Development last August for $11.24 million and implemented the site’s zoning change from commercial to mixed-use. Rose Properties is on a land-buying spree in the Phoenix metro, having closed last month on its sixth property in Avondale and its twelfth commercial property from SunCor. The company also was chosen to build a $70 million spring training facility for the Cleveland Indians in Goodyear, about a mile west of Avondale.
Lane will buy 16 acres of the site for the residential component when entitlements are in place.
“We already have planning commission approval, hope to have city council approval in September and break ground in the first quarter of 2008. Our total estimated cost is $69.5 million,” said Davis, adding that rents are underwritten at $1.25 per sq. ft. Price points for the for-sale units have yet to be determined. Davis expects first occupancy in spring 2009.
“With Pasadera, I’m bringing a very innovative product to Arizona,” said Davis. “When we get into the higher density stick frame residential, typically there are two product types–the podium with parking underneath, or the Texas wrap, or donut. But all that podium and wrap in Orange County and San Diego is four-story. At Pasadera, I’m doing three-story wrap, and it allows me to compete directly with three story garden product in Arizona, with the advantage of getting around 38 or 40 units to the acre, while hiding all the cars. Wrap product costs a bit more, but by not having a fourth story we keep the cost reasonable and have only one middle level to lease up, making the project easier to sell as condos in the future,” he said.
The Metropolitan, a 100-unit condo project adjacent to the Arrowhead Towne Center Mall in Glendale, Ariz., also is expected to come out of the ground next spring. Davis anticipates first move-ins at the $25 million development in Q1 2009. And, in summer 2008, Davis plans to start the 280-unit Marquessa, a two- and three story gated garden-style apartment community near the Superstition Springs Mall in Gilbert, which is located in the southeastern area of Phoenix.
Gilbert, one of the fastest growing cities in the nation, saw a 73.9 percent spike in population during the 12 months ending July 1, 2006 and is adding about 900 new residents each month. The Marquessa will deliver first units several months after Alliance Residential’s 314-unit Broadstone at Twin Fields, which broke ground in June on a site near Loop 202 in Gilbert. Both projects will answer pent-up demand for rental housing in the market.
“My goal is to do about $200 million a year over the next five years, putting about $1 billion of assets in play for Lane in Arizona and Southern California. Over the past several years, Lane Company has expanded from an Atlanta-centric company, adding development projects in Florida, the Northeast, Mid-Atlantic and the Gulf Coast. With Davis on board, the company’s planned Southwestern expansion is well underway, including a surprise footprint in California. Davis also may be able to help identify deals for Lane Company’s recently created value-added acquisition arm, Lane Strategic Investments. Phillip Pitney, that division’s president, initially plans to focus on the Southeast and Mid-Atlantic, but has his eye on the Southwest and both coasts for the future.